Status of Audit and Supervisory Committee Audits

In fiscal year 2024, the Audit and Supervisory Committee audits were conducted by one internal director and four outside directors, based on the annual audit plan. In conducting these audits, the committee regularly exchanges information with the accounting auditor and collaborates by receiving reports and hearing from the internal audit department.

Minoru Kusama, Director (full-time Audit and Supervisory Committee Member), possesses a considerable level of knowledge in finance and accounting, cultivated through long years of experience at a bank. Additionally, Michio Iwabuchi, Outside Director (Audit and Supervisory Committee Member), is a certified public accountant and also possesses a considerable level of knowledge in finance and accounting.

During the current fiscal year, our company has held meetings of the Audit and Supervisory Committee more than once a month. The attendance status of individual Audit and Supervisory Committee Members is as follows:

Specific Deliberation Topics of the Audit and Supervisory Committee are as follows:

• Formulation of audit policies and audit plans
• Development and operational status of the group's internal control system
• Evaluation of the accounting auditor and the appropriateness of audit results

Key Focus Areas for Fiscal Year 2024 are as follows:

• Auditing the compliance status of laws, articles of incorporation, regulations, etc.
• Auditing the consolidated financial statements
• Auditing the risk management systems of four subsidiaries
• Appropriate coordination with auditors for the full application of "Key Audit Matters" (KAM)
• Auditing the safety and health management status
• Auditing the progress of the Third Medium-Term Management Plan

Activities of the Audit and Supervisory Committee Members

Based on the audit policies and plans established by the Audit and Supervisory Committee, the full-time Audit and Supervisory Committee Member primarily attended important meetings such as business plan review sessions, exchanged opinions with the Representative Director, and received regular reports from the audit department. With the accounting auditor, the committee received reports on the status and results of audits, confirmed their content, exchanged opinions, and shared accounting-related information.

The Audit and Supervisory Committee Members received reports on activity results from the full-time Audit and Supervisory Committee Member and expressed opinions based on their professional knowledge. They also attended meetings where the accounting auditor explained audit plans and reported audit results, seeking explanations and expressing their opinions as necessary.

Status of Internal Audits

We have established an Audit Department directly under the President, independent from other operational departments. Two dedicated professionals, as audit specialists, systematically evaluate and improve the effectiveness of risk management, internal control, and governance processes within our company's and our subsidiaries' operational departments.

We exchange information and coordinate with the Audit and Supervisory Committee and the accounting auditor regarding the status of internal audits and financial audits. Furthermore, findings and improvement proposals from internal audits are compiled into reports and submitted to the President and Representative Director and the Board of Directors.

Status of Financial Audits

1. Name of Audit Firm: Deloitte Touche Tohmatsu LLC 
2. Period of Continuous Audit: Since 1999 
3. Certified Public Accountants Who Executed the Audit Engagement
   1. Designated Engagement Partner, Executive Partner: Tadashi Nakayasu
   2. Designated Engagement Partner, Executive Partner: Toshihiro Kuchiki 
4. Composition of Assistants for Audit Services: The assistants involved in our company's accounting audit services consist of 5 certified public accountants and 15 other individuals. 
5. Policy and Reasons for Selecting the Audit Firm: When selecting an audit firm, we comprehensively consider factors such as maintaining independence, expertise, and quality control. As a result of our review, we determined that Deloitte Touche Tohmatsu LLC is a suitable accounting auditor for our company. If the Audit and Supervisory Committee determines that there is an impediment to the accounting auditor's performance of duties or if it deems it necessary, it will decide on the content of a proposal to be submitted to the General Meeting of Shareholders regarding the dismissal or non-reappointment of the accounting auditor. Furthermore, if the accounting auditor is deemed to fall under any of the matters stipulated in Article 340, Paragraph 1 of the Companies Act, the accounting auditor will be dismissed with the unanimous consent of all Audit and Supervisory Committee Members. In such a case, the Audit and Supervisory Committee Member selected by the Audit and Supervisory Committee will report the dismissal of the accounting auditor and the reasons therefor at the first General Meeting of Shareholders convened after the dismissal. 
6. Evaluation of the Audit Firm by the Audit and Supervisory Committee: Our company's Audit and Supervisory Committee evaluates the audit firm based on the "Practical Guidelines for Corporate Auditors, etc., on the Evaluation and Selection Criteria for Accounting Auditors" published by the Japan Audit & Supervisory Board Members Association. As a result, we have evaluated that there are no issues with the audit system of Deloitte Touche Tohmatsu LLC.